Banana Counting Monkey

Monday, August 05, 2002:

On one hand, we have a system that recognizes that human beings are flawed, and have laws and customs which take this fact of life into account. On the other, we have a system that attempts to build a flawless man who will act in ways that law-makers deem "good."

On one hand, we have a system that creates wealth, alleviates poverty and produces quality-of-life products such as antibiotics and painkillers, entertainment venues, and means of transportation. On the other, we have a system that destroys wealth, rations cures for diseases, and dictates entertainment.

On one hand, we have a system whose only real goal is the efficient use of human freedom, but makes people pay for the consequences of the misuses of that freedom. On the other, we have a system that, wherever it has been made an organizing principle, has created tyrannies and been responsible for the murder of tens of millions of people over the last 100 years.

We are speaking, of course, of some of the differences between capitalism and socialism though we have left out the criminal and immoral acts of some of the flawed human beings who participate in the former system. We have ignored the famous cornering of the tulip market in Holland way back when, the insider trading of Ivan Boesky in the Eighties, and the Enron and Worldcom scandals today.

We also won't mention the behavior of most the main Israeli banks 20 years ago the consequences of which we Israeli taxpayers are still paying for. Nor will we dwell on that grocer in Tel Aviv's Carmel Market who tips his scales in his favor at our expense, nor the shiputznik (handyman) who takes our money and leaves us with a leaky roof.

Bad people exist and they invariably do bad things.

However, the tendency of late has been to point to these bad things in order to indict the "system." This is missing the essence.

Capitalism is not a system with a goal and a plan. It is one in which free people pursue their own goals with their own plans. Some of these people are good and some are bad. Most fall somewhere in between. What is shocking to those of us who grew up thinking that the Berlin Wall would never fall and that the world would be perpetually divided between freedom and communism is that the fall-back position of the naysayers is socialism. Socialism! The way of life that has not only failed, but has failed utterly.

IF SOCIALISM had succeeded in even one of its goals if, instead of being destructive to the arts, the sciences, the economy, to the environment and to the lives of hundreds of millions of individuals over the last 100 years, it had been merely stagnant then maybe we could sit and listen to theories on the evils of capitalism.

Midge Decter, in a recent article in Commentary magazine, wrote that socialism "painfully violates everything the world has learned about the behavior of human beings and the behavior of economies." Yet, here in Israel (and other places), we still hear serious talk about the "humanity" of socialism and the "inhumanity" of capitalism.

We don't have to sit here and debate justice let alone economics with socialists, just as we don't have to debate the future with astrologers. Physicists don't argue theories of the universe with Aristotelians, and soldiers no longer doubt the virtue of tanks over the cavalry.

In his book Business as a Calling, American social theorist Michael Novak argued that businessmen were doing "God's work." Essentially basing his theory on the Protestant work ethic, this Catholic thinker understood that working in business being a capitalist, if you will creates wealth and jobs and adds a positive element to the human condition.

For Novak, one of the wonders of the business life or "calling" is that it forces people to meet head-on the moral and intellectual challenges of daily life. In it, people can respond well or not, can succeed or fail, can be honest or not. For Novak, "even under well-designed systems, some people will do evil and good people will sometimes stumble." Business in a free environment tests your mettle and character, humbles you and brings you glory.

In short, capitalism allows people to live as human beings on earth and not as angels in heaven. For the religious Novak "[L]ife is not a morality play. The good do not always win and the wicked often prosper for a long time."

In spite of the "injustice or it all," we continue to live as free albeit flawed human beings. And this is the basic difference between the destructive force that is socialism and the constructive engine that is freedom. Freedom assumes that an imperfect individual is making a variety of decisions for various reasons. Socialism assumes that the imperfection that is at the essence of humanity is a temporary (10,000 year), correctible feature of the human condition.

Freedom depends on three things to ensure that in spite of the fact that the "wicked prosper for a long time," their prosperity will not be eternal. The first check on corruption and wrongdoing is the free market itself. As the stockholding executives of Worldcom know so well, investors are not keen to be lied to. Unfortunately, many of the corrupt manage to walk away before the market knows about the cheating.

Therefore, societies with a sense of pride in their moral lives look to the second and most important check shame. Shame is something about which Western society has become embarrassed, as so many of its politicians and other cultural and religious leaders can't seem to learn the meaning of the word. Shame, for the society that takes itself seriously, is probably the pre-eminent defender of the honesty that freedom needs in order to survive.

Lastly, the rule of law and the knowledge that swift punishment will be meted out to those who cheat society and have no shame, is the final check on the flaws inherent in all of us.

SO, ON one hand we have a belief system that has no successes to its name and has an inherent hatred of human nature. On the other, we have a way of life that creates jobs and accepts the humanity of society's members.

In Israel we can no longer afford the economic and social devastation that policies based on socialist "ideals" continue to bring. Its time to give those of us who are flawed human beings the freedom to go about our business. To those of you who are perfect, please take your pursuit of heaven on earth into the privacy of your homes.

The writer is head of institutional sales at an Israeli brokerage firm.